In the first quarter of 2023, two prominent hedge funds, D.E. Shaw & Co. led by David Shaw and Millennium Management managed by Israel Englander, significantly reduced their stakes in Tesla (NASDAQ: TSLA). D.E. Shaw sold 1.3 million shares, a 43% decrease, while Millennium Management sold 855,100 shares, also a 43% decrease. Both hedge funds simultaneously acquired shares in Cloudflare (NYSE: NET), with D.E. Shaw purchasing 5,400 shares and Millennium increasing its stake by 186% through the purchase of 218,500 shares.
Tesla’s revenue dropped 9% year-over-year to $19.3 billion, with non-GAAP net income down 40% to $0.27 per share as delivery numbers fell by 13%. In contrast, Cloudflare reported a 27% revenue increase to $479 million, marking a significant growth in its customer base, which expanded to 250,819, a 27% increase as well.
While Tesla has struggled with market share and demand, Cloudflare is well-positioned to capitalize on the rising demand for AI infrastructure. Projections indicate that Cloudflare’s earnings may grow at an annual rate of 21% through 2026, while Tesla’s expected growth is 14% annually in the same timeframe.
